Mining industry: Treasure or trouble?<\/p>\n
Emil Salim, Former State Minister of Environment<\/p>\n
A few years ago in the annual meeting of the World Bank Group
\n(WBG), its President, James Wolfensohn, agreed with civil society
\nto review the WBG role in extractive industries (oil, gas and
\nmining) to alleviate poverty through sustainable development.<\/p>\n
Since September 2001 the World Bank has set up an Extractive
\nIndustries Review Team to hold consultations with stakeholders
\nconsisting of governments, corporations and civil societies.
\nConsultation is focused on understanding the views of the
\nrespective stakeholders on the WBG role in extractive industries
\nand identifying areas of consensus and dissenting views in this
\nregard. On the basis of this understanding the WBG will then make
\nrecommendations on its future policies, programs, projects and
\nprocesses in this sector.<\/p>\n
Oil, gas, coal and mining activity will continue to grow in
\nnext decades to meet increasing demand. This will lead to more
\nexploration and exploitation of mining resources in developing
\ncountries and countries in transition. Most of these activities
\ntake place in remote areas with fragile ecosystems and homeland
\nof indigenous communities.<\/p>\n
Governments of these countries consider this as an opportunity
\nto attract extractive industries to promote development.
\nBusinesses are attracted by the possibility to obtain profits
\nfrom this venture.<\/p>\n
The WBG is supporting governments to reform national laws,
\npolicies and institutions to promote investment and development
\nof extractive industries in developing countries. Through capital
\ninvestment of international finance corporations (IFC), and risk
\nfinancing through multilateral investment guarantee agency
\n(MIGA), both as part of WBG family have significantly affected
\nextractive industries development in developing countries over
\nthe last fifteen years.<\/p>\n
Close to 4 billion people live today in 56 countries with
\nmining resources. Among them 1.5 billion people live on less than
\nUS$ 2 a day. In provinces of Indonesia where oil, gas, coal and
\nmining industries are operating, a large proportion of people are
\nstill poor, such as in Aceh, Riau, South Sumatra, East Kalimantan
\nor Papua.<\/p>\n
In addition to poverty, concern has also been raised by civil
\nsocieties all over the world with regard to negative impacts of
\nextractive industries on environment. In Indonesia, the remains
\nof open pit mining in Singkep, Bangka, Biliton and Sawahlunto
\nhave left dirty footprints in our ecological systems.<\/p>\n
While there are views and opinions that exploitation of oil,
\ngas, coal and mining resources can contribute positively to
\npoverty eradication and sustainable development, there are also
\nnumerous studies that point in the opposite direction. It is not
\nsurprising that WBG deems it important to post the question in
\none of the many documents: "Treasure or Trouble? Mining in
\nDeveloping Countries."<\/p>\n
To resolve this issue, since last year regional consultations
\nhave been held on extractive industries for Latin America and the
\nCaribbean, Eastern Europe and Central Asia and Africa. End of
\nApril in Bali, the Asia Pacific Consultation will be held.<\/p>\n
This Consultation is a follow up of the World Summit on
\nSustainable Development, Johannesburg last September that has
\nplaced poverty eradication in the mainstream of sustainable
\ndevelopment.<\/p>\n
Sustainable development embraces economic, social and
\nenvironmental sustainability. The economy needs to sustain growth
\nwhile safeguarding nature's life support system and ensuring
\npoverty eradication.<\/p>\n
The basic question for this regional consultation is whether
\noil, gas and mining industries can promote sustainable
\ndevelopment and whether they are compatible with WBG's mission of
\npoverty eradication through sustainable development. Concrete
\nexamples of WBG projects operating in Asia-Pacific will be
\nraised, such as the MIGA guarantee Lihir gold mine project in
\nPapua New Guinea, and IFC participation in SEPON mine project in
\nLao.<\/p>\n
Problems in oil, gas and mining industries have a technical
\ndimension, as how to cope with disposal of mining waste in the
\nsea, artisanal and small scale mining, issues of air pollution
\naffecting climate change. And issues of governance, corruption,
\ntransparency, social and environmental accountability and revenue
\nmanagement.<\/p>\n
Oil, gas and mining are industries that provide huge sums of
\nearnings, for the corporations, governments and public at large.
\nHowever it also leaves behind a deep footprint on environmental
\ndegradation and social ills. If we are marching forward in the
\n21st century on the path of sustainable development, it is of
\ncrucial importance not to repeat mistakes of conventional
\ndevelopment.<\/p>\n
It is necessary to explore new venues and new paradigms to put
\nextractive industries fully on efforts of poverty eradication
\nwhile sustaining the environment. This is the challenge not only
\nfaced by the World Bank Group but also by the government and
\nindustries.<\/p>\n
A review of the World Bank's role in extractive industries
\nwill be conducted in the Asia Pacific Consultation Workshop in
\nBali, held on April 26-30 by the Extractive Industries Review
\nTeam.<\/p>\n
2. 7korea24
\n2 x 28<\/p>\n
Privatization battle is
\nretreating in South Korea<\/p>\n
Privatization encourages competition, which in turn ensures
\nthat higher-quality goods and services are provided at lower
\ncosts. Another benefit is that it also helps spread share
\nownership widely among the population.<\/p>\n
Therefore, privatization appealed to the previous Kim Dae-jung
\nadministration, which sought to enhance efficiency and reduce
\nwaste in corporate management, in both the private and public
\nsector, after the 1997-98 financial crisis. It selected 12
\ngovernment-controlled businesses for privatization and sold off
\neight, including telecommunication services.<\/p>\n
Now four monopoly utilities - rail, electricity, gas and
\nresidential heating - wait to be digested. But the government is
\nmisguided for backpedaling on privatization since President Roh
\nMoo-hyun's February inauguration.<\/p>\n
The government retreated dramatically when it decided to withdraw
\nits plan to sell off rail operations to private business concerns
\nearlier this week. During a face-off with the labor union of the
\nKorea National Railroad, it agreed to seek an alternative to
\nprivatization and build a social consensus before launching a new
\ncost-cutting program.<\/p>\n
Putting on a bold face, however, the government maintained that
\nit was an accomplishment to settle a labor dispute through
\ndialogue and compromise, thus forestalling enormous losses that a
\nstrike can inflict.<\/p>\n
Few would debate the government's claim that dispute settlement
\nhas prevented the transportation of passengers and goods - when
\nthe economy is slumping - from becoming painfully disrupted.
\nHowever, the government has paid a high price, severely damaging
\nits own credibility in the eyes of both domestic and foreign
\ninvestors.<\/p>\n
In a public statement issued after a cabinet meeting last week,
\nthe government said it would be illegal for the union to strike
\nto protest the privatization plan. It threatened to prosecute
\nunion leaders and demand compensation for torts if they held a
\nstrike illegally.<\/p>\n
The administration said that it would continue to own, maintain
\nand repair railroad facilities and establish a state enterprise
\nto restructure their operations, instead of privatizing them
\nimmediately. This "phased privatization" would prevent sudden job
\nlosses that an immediate change in ownership would cause.<\/p>\n
But before the ink dried on its statement, the government had to
\nabandon this moderate plan when it gave in to the union's demands
\nand agreed to seek an alternative. Now the government has no one
\nelse to blame if its determination to privatize other monopoly
\nutilities is questioned.<\/p>\n
Privatization is suggested to plug the holes in the KNR's
\nmanagement. It has been losing 600 billion won to 700 billion won
\nannually. If nothing is done to improve its leadership, the
\naccumulated loss, it is estimated, could top 50 trillion won in
\n2020.<\/p>\n
Alarmed by this depressing prospect, the government managed to
\nextract a major concession from the union last year - an
\nagreement for joint efforts to promote privatization and attain
\nreduced costs.<\/p>\n
In return for the concession, the government opted for the idea
\nof establishing a state-owned corporation as a vehicle that would
\nsmooth the transition to complete private ownership. It also
\nagreed to a union request that workers dismissed for unlawful
\nlabor activities be reinstated.<\/p>\n
Such a compromise looked inevitable. Nevertheless, the change
\nin policy elicited criticism from a sizable number of management
\nexperts, who called for an immediate sell-off. They said there
\nwas no reason to delay a plan to restructure the hemorrhaging
\nrail business.<\/p>\n
Nothing has since changed to justify a decision to cancel
\nprivatization. Instead, the government will have the same problem
\nof making up for huge losses with taxpayers' money in the years
\nahead as it did in the past. And no viable alternative to
\nprivatization has been found in making railways cut costs now and
\nearn profits later in competition against buses, trucks and
\njetliners.<\/p>\n
It is most unfortunate that the incumbent administration is
\nnot as resolute in privatizing state enterprises as its
\npredecessor. This fact raises the suspicion that it regards
\nprivatization as more harmful than beneficial because it can
\nconcentrate economic power in the hands of a select few and raise
\nutilities charges.<\/p>\n
Such a suspicion is warranted by remarks made by a leading
\nmember of the presidential transition team, who voiced concerns
\nabout the prospect of monopoly utilities being controlled by
\nprivate businesses shortly before Roh took office. A final
\nconfirmation will come when the administration submits a bill on
\nthe restructuring of the Korea National Railroad by June as it
\npromised.<\/p>",
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